Key events influencing the company's business

Fiscal 2012 was characterized, in particular, by the development of Europe’s debt crisis and the associated slump in demand, especially in the automotive and construction sectors. This trend spread to other regions as the year progressed, and contrasted with the momentum from further growth in the demand for agricultural products. The extremely low to negative growth rates posted by the tire and automotive industries in some regions had a tangible effect on our Performance Polymers segment. The volatility in raw material prices during the reporting year did not negatively impact our business due to the consistent application of our price-before-volume strategy.

Declining demand over the course of 2012, particularly from the European and Latin American automotive sectors, hampered sales growth in our Performance Polymers segment primarily because of lower volumes. The segment achieved a modest improvement in earnings compared with the previous year, in part because of the price adjustments driven by the volatility of raw material prices. The situation in the European automotive industry held back development in some of the business units of our Performance Chemicals segment as well.

Performance varied from region to region. North America and Asia-Pacific were our most successful reporting regions with nearly double-digit growth rates in sales. Sales in all of the other regions were essentially level with the previous year. Adjusted for currency and portfolio effects, the sharpest decline in business was seen in Latin America. This was partly due to the decrease in the price of a key raw material as well as to lower demand from the tire and automotive-related industries.